Nebraska's economy is expected to grow modestly over the next two years before accelerating in 2026, according to the new forecast from the University of Nebraska-Lincoln's Bureau of Business Research and the Nebraska Business Forecast Council.
“While the economy will benefit from real wage growth, high interest rates are expected to slow state economic growth in 2024 and 2025,” said Eric Thompson, director of the Bureau of Business Research and KH Nelson Professor and Chair of Economics at Nebraska.
“There is also an increased risk of recession over the next two years as the impact of high interest rates continues to ripple through the economy, slowing consumer spending and business investment,” Thompson said. “Political mistakes are another potential risk. “The U.S. must avoid recent trends toward a “scarcity economy,” leading to over-regulation of energy and labor markets as well as trade and immigration restrictions.”
Employment in Nebraska is expected to grow 0.6% next year.
Employment growth will also be moderate at 0.7% in 2025 before accelerating to 0.9% in 2026.
Job growth over the next two years will be concentrated in the service industry, which includes business services, healthcare, and leisure and hospitality. There will also be solid job growth in construction and consumer goods manufacturing, which includes food manufacturing.
Employment growth will be limited in retail and wholesale trade, durable goods manufacturing and the public sector.
“Slow labor force growth will make it difficult to hire new workers in industries with modest wages,” Thompson said.
The outlook for agriculture in Nebraska is positive. The state's farm income was about $8 billion that year, nearly a record. Farm income is expected to fall to about $7 billion next year due to decreased crop insurance payments. However, it will remain close to this total in both 2025 and 2026 as agricultural commodity prices and input costs decline slightly. Farm income in Nebraska remains high by historical standards as crop and livestock prices are high and production increases. Farm income from 2024 to 2026 will primarily reflect earned income because federal government payments will be capped.
Given moderate job growth, nonfarm income in Nebraska will rise 3.6% next year, slightly above the expected 3% inflation rate. It will grow by 3.6% in 2025 and 3.8% in 2026, even if the expected inflation rate falls to 2.5% in 2025 and 2% in 2026.
“Job growth in Nebraska will be sufficient to support rising real incomes in the state,” Thompson said.
The Nebraska Business Forecast Council consists of David Dearmont, Nebraska Department of Economic Development; Mitch Herian, Bureau of Business Research; Scott Hunzeker, Nebraska Department of Labor; Scott Loseke, Nebraska Public Power District; Brad Lubben, Nebraska Department of Agricultural Economics; Hoa Phu Tran, Nebraska Department of Revenue; Melissa Trueblood, Nebraska Public Power District; and Thompson.
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